You can think of a Hypervisor as the kernel or the core of a virtualization platform. The Hypervisor is also called the Virtual Machine Monitor. The Hypervisor has access to the physical host hardware.
Of the total amount of disk space taken for a virtualization platform (like Hyper-V or VMware ESX), the Hypervisor is, by far, the smallest part. A Type 1 Hypervisor runs on the bare metal of the hardware. Examples of a Type 1 Hypervisor are Hyper-V and ESX Server. A Type 2 Hypervisor is hosted by an operating system. Examples of a Type 2 Hypervisor are VMware Server and Microsoft Virtual Server.